Mexico Central Bank Reduces Rates to Boost Economy (Update3)
Mexico’s central bank cut the benchmark rate from a 29-month high to spur economic growth. It was the first time the bank used a rate target to ease credit.
Banco de Mexico, which normally adjusts rates by changing the amount it lends banks overnight at higher rates, today did so by saying by how much it would allow banks to drive down the overnight rate. In a statement, the bank’s board said it would “allow an easing of monetary conditions of no more than 25 basis points.'’ A basis point is 0.01 percentage point.
The move reduces Mexico’s overnight loan rate to 9.5 percent from 9.75 percent, the highest since March 2003. The reduction is a first step in reversing 12 interest-rate increases through March that slowed economic growth and inflation in Latin America’s largest economy. The peso fell and bonds rose.
“You’ll continue to see a loosening of monetary policy in a measured fashion,'’ said Mohamed El-Erian, who manages the world’s biggest emerging-market bond fund. “Inflation is converging to the target, wages have been very well behaved and so has the currency. On top of that, you have a slowing economy,'’ said El- Erian, who manages about $27 billion in assets, including Mexican bonds, for Newport Beach, California-based Pacific Investment Co., in a telephone interview.
More: quote.bloomberg.com
Mexico's Central Bank Reduces Rates to Boost Economy (Update1)
Mexico's central bank reduced its benchmark lending rate for a second time in as many months to help jumpstart a slowing economy, taking advantage of slowing inflation.
The Bank of Mexico said in a statement it will allow the overnight rate to decline to 9.25 percent from 9.50 percent following a reduction of 0.25 percentage point at its Aug. 26 meeting, which marked the first time ever the central bank set a rate for the market.
``The Mexican economy reduced its expansion rate during the first half of the year, showing lower
Mexico 28-day T-bill yield down to 8.42 pct
The yield on Mexico's benchmark 28-day Cetes, or T-bills, shed 8 basis points to 8.42 percent on Tuesday on expectations the central bank will push interest rates lower this week.
Longer-term rates also fell at the central bank auction.
The fall in interest rates was slightly smaller than market expectations. A Reuters survey of Cetes dealers had forecast the rate on the benchmark one-month paper would drop 10 basis points to 8.40 percent.
The yield on the 10-year peso denominated bond fell to 8.45 percent from 8.73 percent when it was last auctioned on Nov.
UPDATE 4-Mexico pushes rates lower in historic move
Mexico's central bank pushed interest rates lower on Friday for the first time in over three years to give the soft economy a boost, now that inflation is under control.
It was the first time the bank has explicitly told markets where it wants interest rates to go, and analysts said it was a major step toward a U.S.-style reference rate system.
"Considering the balance of risks versus inflation, the central bank has decided to allow a relaxation of domestic monetary conditions of no more than 25 basis points," the central bank said in
Mexico cenbank eases rates by 25 basis points
Mexico's central bank pushed interest rates 25 basis points lower for a fourth straight month on Friday to fan a weak economy.
With inflation under control, the central bank said it would allow the overnight lending rate to fall to 8.75 percent. The move had been widely expected.
The bank held its money market steady at 79 million pesos per day. The bank controlled monetary policy through changes to the short before it began pushing rates down directly.
After a long period of tightening monetary policy to bring inflation down, the central bank changed direction
UPDATE 1-Mexico 28-day T-bill yield falls to 9.36 pct
The yield on Mexico's benchmark 28-day Cetes, or T-bills, shed 6 basis points to 9.36 percent on Tuesday, as investors bet the central bank will push down its key interest rate over the next few months.
Longer-term rates also fell at the central bank auction.
The decline in short-term interest rates was slightly bigger than market expectations. A Reuters survey of Cetes dealers had forecast the rate on the benchmark one-month paper would edge down 3 basis points to 9.39 percent.
Following signs of a strong improvement in inflation, Mexico's central bank pushed interest rates
Mexico Buys $2.88 Billion of Central Bank Reserves (Update3)
Mexico's government bought $2.88 billion of central bank international reserves that it will use to help meet payments on all foreign debt coming due in 2006 and 2007.
The funds, which the government acquired by selling pesos to the Banco de Mexico, combined with $1.89 billion the government has available from earlier foreign bond sales will cover the $4.77 billion of foreign debt maturing in the next two years, the Finance Ministry said in a statement. Finance Minister Francisco Gil Diaz said that the dollar purchase will allow Mexico's government to stay
UPDATE 2-Mexico central bank pushes interest rates lower
Mexico's central bank on Friday pushed interest rates 25 basis points lower for the second straight month to revive a tepid economy.
The bank said it would allow the overnight lending rate, which has held at around 9.50 percent for the last month, to fall a quarter of a percentage point. The move was widely expected as inflation has come under control in recent months.
After a long period of tightening monetary policy to bring inflation down, the central bank changed tack last month and began pushing rates lower to help the struggling economy.
"The
UPDATE 1-Mexico central bank holds interest rates steady
Mexico's central bank held interest rates steady on Friday, although it is widely expected to push them lower again later this month to help a soft economy.
The central bank said in its twice-monthly policy review it was keeping its money market "short" unchanged at 79 million pesos a day and made no change to the country's overnight lending rate, which stands at 9.00 percent.
The short regulates overnight lending levels and was the central bank's main monetary policy weapon before it recently began explicitly telling markets how much rates should move.
With inflation under
Mexico's Industrial Output Probably Rose 2% in September
Mexico's industrial production probably rose 2 percent in September, the latest evidence that the expansion in Latin America's second-biggest economy is sputtering as export growth to the U.S. slows.
Output growth of 2 percent -- the median estimate of 15 economists surveyed by Bloomberg -- would be down from 2.1 percent in August. It would also mark the fifth straight month in which production growth failed to reach 3 percent. Mexico had average monthly output growth of 3.8 percent last year.
``This economy is not robust,'' Gray Newman, chief Latin American economist at
OECD says Mexico could eventually move to direct setting of rates, drop 'corto'
The Mexican central bank could eventually drop the 'corto' mechanism and switch to a system of directly setting interest rates, the OECD said in a report on the Mexican economy.
The Bank of Mexico currently influences market interest rates through the 'corto' instrument, under which it sets a target for the amount held by banks in accounts at the central bank.
An increase in this target drains liquidity from the money market and pushes short-term interest rates higher, while an increase in the 'corto' target produces the
